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A Distributional Analysis Of Substituting A Value-Added Tax For The Current Federal Tax System, Xiaoyan Chu

Doctoral Dissertations

The growing public dissatisfaction with the current federal tax system and the ongoing national debt crisis are generating serious consideration of alternative consumption tax systems, especially the value-added tax (VAT hereafter). The purpose of this study is to objectively evaluate the distributional effects of both the current federal tax system and the alternative value-added tax system it is intended to (partially) replace.

This study finds some evidence that the current federal tax system becomes significantly more progressive over the period of 2005 and 2009 under the annual income approach, which is contrary to the prior research findings that the current …